Correlation Between Magic Software and ScanSource
Can any of the company-specific risk be diversified away by investing in both Magic Software and ScanSource at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Magic Software and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magic Software Enterprises and ScanSource, you can compare the effects of market volatilities on Magic Software and ScanSource and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Magic Software with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Software and ScanSource.
Diversification Opportunities for Magic Software and ScanSource
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magic and ScanSource is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Magic Software Enterprises and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Magic Software is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Magic Software Enterprises are associated (or correlated) with ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Magic Software i.e., Magic Software and ScanSource go up and down completely randomly.
Pair Corralation between Magic Software and ScanSource
Assuming the 90 days horizon Magic Software Enterprises is expected to generate 1.43 times more return on investment than ScanSource. However, Magic Software is 1.43 times more volatile than ScanSource. It trades about 0.17 of its potential returns per unit of risk. ScanSource is currently generating about -0.07 per unit of risk. If you would invest 1,020 in Magic Software Enterprises on September 24, 2024 and sell it today you would earn a total of 100.00 from holding Magic Software Enterprises or generate 9.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Software Enterprises vs. ScanSource
Performance |
| Timeline |
| Magic Software Enter |
| ScanSource |
Magic Software and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Software and ScanSource
The main advantage of trading using opposite Magic Software and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Software position performs unexpectedly, ScanSource can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ScanSource will offset losses from the drop in ScanSource's long position.| Magic Software vs. Intuit Inc | Magic Software vs. Palo Alto Networks | Magic Software vs. Synopsys | Magic Software vs. Dassault Systmes SE |
| ScanSource vs. MULTI CHEM LTD | ScanSource vs. LEGAL GENERAL | ScanSource vs. SPORTING | ScanSource vs. US FOODS HOLDING |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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